Post on 14-Mar-2020
Kopernik Global Investors2Q 2018 Conference Call
Presented by:David B. Iben, CFACIO & Lead Portfolio Manager
Mutual Funds41%
Separate Accounts34%
UCITS17%
Private Funds8%
• Leadership and ownership by investment professionals
• 100% employee owned
• Equity participation for all professionals
• Principals invest alongside clients
• Capacity to be limited, enhancing return potential
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Total Managed and Advisory Only Assets by Type (As of 6/30/2018)
• Kopernik Global All-Cap
• Kopernik Global Unconstrained
• Kopernik Global Long-Term Opportunities (formerly Kopernik Global Real Asset)
• Kopernik International
Centering on Client Success
Managed AssetsMutual Funds $1,325.73 MMPrivate Funds $260.70 MMUCITS (Sub-advised) $548.27 MMSeparate Accounts $1,102.17 MM
Total Firm AUM $3,236.87 MM
Advisory Only AssetsSeparate Accounts $272.67 MM
Total Managed and Advisory Only Assets: $3,509.54 MM
Kopernik Global Investors, LLC (“Kopernik”) is a globalequity investment management specialist, organized toensure a culture centered on client success.
Focused Offerings
Assets as of June 30, 2018 are preliminary.
Total Firm AUM Breakdown
Like our namesake, we are dedicated to reasoning over convention and to clients’ needs above convenience.
Our Investment Beliefs
Independent thought
Long-term global perspective
Limited capacity
Value as a prerequisite
Bottom-up fundamental analysis
Industry-tailored valuations
Group vetting
Mikolaj Kopernik, better known by the Latin spelling, Nicolaus Copernicus, proposed the heliocentric model of the universe in the early 1500s. Whatinterests us is the fact that he trusted his own observations instead of accepting what “everyone” thought to be true. He faced scorn for his “novel andincomprehensible” theses. Though primarily an astronomer, Kopernik set forth a version of the “quantity theory of money,” a principal concept ineconomics to the present day. He also formulated a version of Gresham’s Law, predating Gresham.
As independent thinkers, Kopernik Global Investors honors Mikolaj Kopernik in the contemporary investment world. We believe that accomplishedinvestors who trust their own analyses and instincts can generate significant excess returns as a result of market inefficiencies driven by erroneousprofessional and academic theories and practices.
Achieving Value through Independent Thought
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Celebrating 5 Years!
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How has value performed over the past 5 years?
$800
$900
$1,000
$1,100
$1,200
$1,300
$1,400
$1,500
$1,600
$1,700
Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18
MSCI World Value Index vs MSCI World Growth IndexJuly 2013 - July 2018
MSCI World Growth Index MSCI World Value Index
Source: Bloomberg
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Worse yet, how has Value compared to momentum?
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
$2,200
$2,400
Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18
MSCI World Value Index vs Nasdaq Composite Index (CCMP)July 2013 - July 2018
MSCI World Value Index NASDAQ Composite Index
Source: Bloomberg
$938$891
$830
$602
$233
$160
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
$1,100
Apple Amazon Alphabet Facebook Gold Mining Netflix
Billio
ns
Market Caps as of July 2018
The entire gold mining industry is trading for less than popular tech stocks
Source: Bloomberg
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Past 1 ½ Years
$1,000
$1,050
$1,100
$1,150
$1,200
$1,250
$1,300
$1,350
$1,400
Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18
MSCI World Value Index vs MSCI World Growth IndexJanuary 2017 - July 2018
MSCI World Growth Index MSCI World Value Index
Source: Bloomberg
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YTD Momentum is all that’s working
$920
$940
$960
$980
$1,000
$1,020
$1,040
$1,060
$1,080
Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18
MSCI World Value Index vs MSCI World Growth IndexJanuary 2018 - July 2018
MSCI World Growth Index MSCI World Value Index
Source: Bloomberg
The trainload of consumer Discretionary and information technology stocks speeds along blissfully
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Price-insensitive investment continues full steam
After allThe grabbing hands
Grab all they canAll for themselves
After allIt's a competitive world
Everything counts in large amounts
-Depeche ModeEverything Counts
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“A good decision is based on knowledge
and not numbers”-Plato
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Judgement vs Data
• Is this a new paradigm?• Is there such a thing as diseconomies of scale?• Can the ROIC perpetually vastly exceed the COC?• Have greed and fear been eliminated from the human genome?• Do algorithms rein-in or augment emotions?• How long can asset values exceed the values at which they can be supported by rents,
earnings, cash flow, wages, etc?• As the FAANNG and BAT companies increasingly compete against each other – can they all
win?• Can central bankers actually conjure wealth out of thin air, or merely increase the supply of
currency/transfer wealth amongst constituents?• Is it helpful to know what one is purchasing before investing one’s money?
Inquiring Minds Want to Know
Thought is too important to be delegated to machines andmanaging peoples’ valuable capital is too important to be donewithout rigorous due diligence and thoughtful analysis
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Have Algos Eliminated Emotional Influences, or Augmented Them?
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The World is Cyclical – Value vs Growth Stocks
0.80
0.90
1.00
1.10
1.20
1.30
1.40
1.50
1.60
1.70
1.80
1.90
MSCI World Value vs MSCI World Growth1975 - 2018
Source: Bloomberg
Source: CLSA Microstrategy
Sound judgement requires second level thinking
“Things get damaged, things get broken” – Depeche Mode
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Source: Goldman Sachs Investment Research
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If There Was Ever A Time For Active Management, It Is Now!
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“If you want to have better performance than the crowd, you must do things differently from the crowd.”
- John Templeton
As of March 31, 2018
Performance Metrics Kopernik Global All-Cap Peers1 MSCI ACWI
(Net)Kopernik
International Peers2 MSCI ACWI ex U.S. (Net)
Active Share 99.6 91.6 -- 99.1 90.0 --Non-Index Holdings3 65% -- -- 34% -- --
1 Yr.Correlation to Index4 0.56 0.92 -- 0.63 0.96 --Standard Deviation 9.1 8.8 8.6 8.0 9.3 9.2Tracking Error 8.3 3.8 -- 7.4 2.9 --
3 Yr.Correlation to Index4 0.55 0.93 -- -- -- --Standard Deviation 20.8 11.0 10.9 -- -- --Tracking Error 17.4 4.5 -- -- -- --
Source: eVestment Global Database (updated quarterly)1 Peer Group: eVestment Global Value Equity – Median Values2 Peer Group: eVestment ACWI ex US All-Cap Value Equity – Median Values 3 45 of the 73 (65%) total holdings in Global All-Cap are not represented in the MSCI ACWI Index, 14 of the 41 (34%) total holdings in International are not represented in the
MSCI ACWI ex U.S. Index.4 Kopernik Global All Cap uses the MSCI ACWI Index, Kopernik International uses the MSCI ACWI ex U.S. Index.
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0
5
10
15
20
25
30
0
10
20
30
40
50
60
Canada Emerging Markets Europe Japan Pacific ex Japan US
Portfolio Region Weights*
Portfolio Sector Weights* Top Ten HoldingsName Country Port Weight %
Cameco Corp Canada 4.75Gazprom PJSC Russia 4.25KT Corp South Korea 4.25Newcrest Mining Ltd Australia 4.00Electricite de France SA France 3.75Range Resources Corp United States 3.25Golden Agri-Resources Ltd Singapore 3.00RusHydro PJSC Russia 3.00Centrais Eletricas Brasileiras Brazil 2.75Mitsui & Co Ltd Japan 2.75
Global All-Cap – Model Portfolio Characteristics (as of 6/30/2018)
*Does not include Options, which were approximately 1.00% of the portfolio as of June 30, 2018.**Small-Cap = less than $2 billion, Mid-Cap = $2 billion - $10 billion, Large-Cap = greater than $10 billionPortfolio weights and characteristics above are based on the holdings of a model portfolio as of June 30, 2018. Portfolio characteristics, sector and country designations are calculated using data from Bloomberg. The MSCIAll Country World Index is a broad-based securities market index that captures 2,781 primarily large and mid cap companies across 23 developed and 24 emerging market countries as of June 30, 2018. The MSCI All CountryWorld Index is different from the strategy in a number of material respects, including being much more diversified among companies and countries, having less exposure to emerging market and small cap companies, andhaving no ability to invest in fixed income or derivative securities.
Portfolio % MSCI ACWI %Large-Cap** 28.3 90.2Mid-Cap** 38.0 9.7Small-Cap** 30.0 0.1
Developed Markets 56.9 88.4Emerging Markets 39.3 11.6
U.S. 5.4 53.6Non U.S. 90.1 46.4
Portfolio Characteristics
Excludes non-equity securities
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0
5
10
15
20
25
30
0
10
20
30
40
50
Canada Emerging Markets Europe Japan Pacific ex Japan US
Portfolio Region Weights*
Portfolio Sector Weights* Top Ten HoldingsName Country Port Weight %
Newcrest Mining Ltd Australia 4.50Cameco Corp Canada 4.50Gazprom PJSC Russia 4.25Wheaton Precious Metals Corp Canada 3.75Barrick Gold Corp Canada 3.25KT Corp South Korea 2.50Golden Agri-Resources Ltd Singapore 2.25Lenta Ltd Russia 2.25Novagold Resources Inc Canada 2.25MEG Energy Corp Canada 2.00
International – Model Portfolio Characteristics (as of 6/30/2018)
*Does not include Options, which were less than 1.00% of the portfolio as of June 30, 2018.**Small-Cap = less than $2 billion, Mid-Cap = $2 billion - $10 billion, Large-Cap = greater than $10 billionPortfolio weights and characteristics above are based on the holdings of a model portfolio as of June 30, 2018. Portfolio characteristics, sector and country designations are calculated using data from Bloomberg. Harmonicweighted average is a method of calculating an average value that lessens the impact of large outliers. The MSCI All Country World ex U.S. Index is a broad-based securities market index that captures 2,154 primarily largeand mid cap companies across 22 developed and 24 emerging market countries as of June 30, 2018. The MSCI All Country World ex U.S. Index is different from the strategy in a number of material respects, including beingmuch more diversified among companies and countries, having less exposure to emerging market and small cap companies, and having no ability to invest in fixed income or derivative securities.
Portfolio % MSCI ACWI ex US %Large-Cap** 24.4 82.9Mid-Cap** 32.5 16.8Small-Cap** 8.4 0.3
Developed Markets 34.5 75.0Emerging Markets 30.8 25.0
U.S. 1.8 -Non U.S. 63.5 100
Portfolio Characteristics
Excludes non-equity securities
“It’s not enough to be different – you also need to be correct. The problem isthat extraordinary performance comes only from correct nonconsensualforecasts, but nonconsensual forecasts are hard to make, hard to makecorrectly, and hard to act on. ”
- Howard Marks
Characteristics above are based on the holdings of a model portfolio as of June 30, 2018 and are calculated using data from Bloomberg. Harmonic weighted average is a method of calculating an average value that lessensthe impact of large outliers. The MSCI All Country World Index is a broad-based securities market index that captures 2,781 primarily large and mid cap companies across 23 developed and 24 emerging market countries as ofJune 30, 2018. The MSCI All Country World ex U.S. Index is a broad-based securities market index that captures 2,154 primarily large and mid cap companies across 22 developed and 24 emerging market countries as ofJune 30, 2018. The MSCI All Country World Index and the MSCI All Country World ex U.S. Index is different from the strategy in a number of material respects, including being much more diversified among companies andcountries, having less exposure to emerging market and small cap companies, and having no ability to invest in fixed income or derivative securities.
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As of June 30, 2018
1.60
0.75
2.21
0.66
Trailing P/B Ratio(Price to Book)
Global All-Cap
MSCI ACWI
International
MSCI ACWI ex USA 1.94
0.76
2.53
0.69
Trailing P/TBV Ratio(Price to Tangible Book Value)
Global All-Cap
MSCI ACWI
International
MSCI ACWI ex USA 1.50
1.30
1.90
1.26
Trailing EV/S Ratio(Enterprise Value to Sale)
Global All-Cap
MSCI ACWI
International
MSCI ACWI ex USA 10.35
4.84
12.13
5.14
Trailing P/CF Ratio(Price to Cash Flow)
Global All-Cap
MSCI ACWI
International
MSCI ACWI ex USA
$69,521
$19,650
$142,983
$15,700
Weighted Average Market Cap ($USD, Milions)
MSCI ACWI
MSCI ACWI ex USA
G
I
$8,578
$4,827
$10,406
$1,875
Median Market Cap ($USD, Milions)
G
MSCI ACWI
International
MSCI ACWI ex USA 14.99
12.85
17.78
18.52
Trailing P/E Ratio(Price to Earnings)
Global All-Cap
MSCI ACWI
International
MSCI ACWI ex USA 3.04
2.78
2.42
2.57
Yield TTM(Trailing Twelve Months)
Global All-Cap
MSCI ACWI
International
MSCI ACWI ex USA
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Post 5 Years of Underperformance
Does value come from expected cash or is cash likely to be generated from things that are intrinsically valuable?
Potential UpsideYear 50.0% 100.0% 150.0%
1 50.0% 100.0% 150.0%
Inte
rnal
Rate
of R
etur
n
2 22.5% 41.2% 58.1%
3 14.5% 26.0% 35.7%
4 10.7% 18.9% 25.7%
5 8.5% 14.9% 20.1%
6 7.0% 12.3% 16.5%
7 6.0% 10.4% 14.0%
8 5.2% 9.1% 12.1%
9 4.6% 8.0% 10.7%
10 4.1% 7.2% 9.6%
THANK YOUQ&A Session
A copy of this presentation is available on www.kopernikglobal.com.
The information presented herein is proprietary to Kopernik Global Investors, LLC. This material is approved for a presentation to authorized individuals only and, accordingly, thismaterial is not to be reproduced in whole or in part or used for any purpose except as authorized by Kopernik Global Investors, LLC.
Please consider all risks carefully before investing. The accounts managed according to the Global All-Cap investment strategy are subject to certain risks such as market,investment style, interest rate, deflation, and illiquidity risk. Investments in small and mid-capitalization companies also involve greater risk and portfolio price volatility thaninvestments in larger capitalization stocks. Investing in non-U.S. markets, including emerging and frontier markets, involves certain additional risks, including potential currencyfluctuations and controls, restrictions on foreign investments, less governmental supervision and regulation, less liquidity, less disclosure, and the potential for market volatility,expropriation, confiscatory taxation, and social, economic and political instability. Investments in energy and natural resources companies are especially affected bydevelopments in the commodities markets, the supply of and demand for specific resources, raw materials, products and services, the price of oil and gas, exploration andproduction spending, government regulation, economic conditions, international political developments, energy conservation efforts and the success of exploration projects. Therecan be no assurances that investment objectives will be achieved.
Kopernik Global Investors, LLC is an investment adviser registered under the Investment Advisers Act of 1940, as amended.
This document, as of July 19, 2018 is descriptive of how the Kopernik team manages its strategies. There is no guarantee that any strategy’s investment performance objectiveswill be achieved. This profile is not legally binding on Kopernik Global Investors, LLC or its affiliates.
© 2018 Kopernik Global Investors, LLC | Two Harbour Place | 302 Knights Run Avenue Suite 1225 | Tampa, Florida 33602 | 813.314.6100 | www.kopernikglobal.com
Important Information
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